A beginner’s guide to investing… who should, how much & where to do it

24:35Let's talk about, let's move to somebody now who's age 50, they're mostly paid off their mortgage, they've got decent income coming in, and they've built up a reasonable pile of savings, let's say 80, 90, 100 ,000 pounds. What proportion of that would you want to be looking at in investments? Everybody understands this is very generic. It's always specific to the individual. Well, back over to me again, And then I would say if you've got everything, you've got all of your various sort of liabilities out of the way, everything's under control. If you've got an investment, if you're 50, you've got an investment horizon of, let's just say, 10 years or so, there's no reason why you can't be putting 75 % of that into investments on the basis that you've got income coming in.

25:17It still gives you 20, 30 ,000 pounds that is kept aside for a rainy day to meet bills, unexpected items, what I call yellow beak money. which is your children that have flown the nest that you think have gone then come back saying mum dad can I have this can I have that their bills are always more expensive as they get older it's strange that isn't it so I would say as the older you get the more financially stable independent you get the more you can look at putting investing aside and then though as you get even older and you start to move past retirement and into older age then what you need to do is diminish your risk because you don't have that long for it to grow so there is a curve here, isn't it?

25:57You start off younger, you probably want to be more in cash unless you've got a very large amount of money and investing less because you can't afford the risk. As you go up and you get more wealthy and more affluent, if you're lucky enough for that to happen to you, you want to take more investment risk. But then as you move towards the end and the final years of your life, you bring the risk down. That's exactly it. There's a posh word we use in the industry, it's called lifestyling, which means that as you're accumulating and you're building up, then you're building up. But then as time goes by, like you said, you get that curve and then you start to want to become more cautious.

26:30You don't want to start to take risks. You start to move away from higher equities or higher investing and your ratio towards savings, i.e. cash base, starts to increase. So it reverses back again. OK, so I'm just going to read a couple of comments that we've had on this because people have some really vociferous opinions. And I think some of this is because it's become political at the moment with Rachel Reeves at a Mansion House speech saying we need to get more people to invest. So Jane says, I hope you make it clear that the value of investments in assets such as shares can go down as well as up.

27:02Folks need to understand the risk versus reward and make sure they're not coerced into investing by some financial advisor. They need to choose wisely. Ian says, lots of people talk about risks as the barrier to entry for stocks and shares. However, what are the real risks in a global index fund diversified over 3 ,000 plus companies that you hold over five years. Are the compounding returns not worth it? Well, yeah, I mean, that's the basic premise. You know, if the worldwide economy is growing and you're invested in it, it should outperform savings because that's the way that the world works, although there are no guarantees.

27:37And I do think what's interesting here is one of the things the Chancellor said is that for so long, we've put all these risk warnings, and there are a hell of a lot of risk warnings on any investment. Past performance does not predict future performance, investments can go down as well as up, that we have, you know, all the nudge factors and the barriers are actually trying to put people off investing. They're not meant to be doing that. They just want people to know the risks in advance. And I'm not sure, you know, risk is a fascinating term. Risk is a term that just means variance of outcomes.

28:07It means positive or negative. So risk, when you take high risk, the hope is you're going to get high growth. The cost is there's a potential that you're going to lose some of the money that you put in. And just understanding that risk shouldn't always be seen as a negative. Risk is something, sometimes an opportunity, is something I think we don't necessarily use the language when we're talking about investing. I think that's where the Chancellor's going. And as long as we still remind people, you know, don't put your money in that thing if you cannot afford to lose a penny, then I think we can start to change the language and the dynamic of the way that we talk about it in the UK.

28:43In the US, the culture of investing is so different. Louise? What we have to remember here is that since 2008, the big financial crash, everyone was queuing up outside, getting all their cash out. And then the financial services industry was their big, big bad boy, as were the banks. This is where the regulation became even more and more onerous, to the point that in the industry, we almost call compliance and regulatory intervention the business prevention unit. You're absolutely right. You can send a report to a client and all they want to do is a simple£10 ,000 cash ISA or something like that.

29:22You can have two or three lines saying this is what you want to do and the reasons why. And then before you know it, you've got another two pages of all this compliance blurb that points the investor off. We're trying to strip all that back. Rachel's absolutely right. Let's get rid of all this overburden red tape and let's start getting it to a position where somebody can come in off the street, they can go and access guidance without having to get embroiled into a whole pile of blurb that waters down what they're actually trying to do and puts them off.

29:57Okay, let's move on to the next section, which is the basics of investing. Alan up first. Realistically, if you were to start to invest now, what's the minimum amount you would say is realistic for it to be actually worthwhile? Well, I mean, any amount is realistic. You could put in£10 a month as long as you can afford to put that money away and you hope you get some growth on it. But most people are looking£50,£100 a month. What would you say on this one, Valerie? You're absolutely right, Martin, in that any amount is better than nothing. So even if you've got a spare£10 a month that you can spare that you don't need to spend in the short term, then yes get it invested because actually getting into the good habit of saving into different investments can build up into a very large pot over time and it's getting into that regular habit of doing it that can make a huge difference.

30:50People are often put off by the final mile on this I mean if you really want to start on a small amount there are a number of robo-investing firms out there go and look them up where they will decide you know they'll try and skim money out of your current account for you and put it in an investment and they'll decide what the investment are trying to make it all a little bit easier for small amounts of money but I mean there is no amount too small as long as you've got always keep your cash emergency fund always have two or three months of bills in cash in case something happens so that you're able to afford that but above that you could start to invest I mean let's I think we've got Aaron on the line Aaron are you with us you've got a question I think hi Martin I'm uh I'm here at the moment I'm just trying to get into investing.

31:29I just really wanted to understand what the best platform for someone just trying to dip their toes into investing is. Because I know that the small amount of money I'm going to put in, the fees are going to overwhelm the upside of any investments. So roughly how much are you talking about putting in and what platforms have you looked at? So I was thinking about£100 a month. Yeah, good. I've heard names being thrown around like Hargreaves Lansdowne, AJ Bell, Vanguard, but I just don't know which one to pick. Well, Hargreaves Lansdowne and AJ Bell, they are platforms out there that you can put in.

32:03They're non-advisory platforms so you can read a little bit about what's going on and they make it quite simple that you put your money in and choose what's going on. Louise, do you want to take this one? Yeah. Aaron, if you go Google which have just done a survey, 2025, so it's relatively up to date, and it lists down lots and lots of platforms. And like Martin said, you've got the key big names there, Hargrews, Lanzar, AJ Bell. And it does a little bit of a comparison, sort of looking at the costs and the charges and all those sorts of things. Generally, for£100 a month, that's a really good amount.

32:34If what you're looking at doing is investing, and by that I mean putting it into something that involves stocks and shares, £25 a month,£100 a month is about where these platforms will start. There's one thing that you might want to consider is that there is a platform called Vanguard. Now, it's slightly different to the others. The AJ Bells and the Harbreed Landowns of this world have got really good portals, and they'll create ready-made portfolios for you because at the end of the day, you're not a fund manager, you're not an investment manager and they'll ask you some questions and they'll come up with a portfolio that suits your risk, that you feel comfortable with.

33:07And they look at the whole of the market and have got lots and lots of things on there. So what that means is the whole of market, that means you can buy shares, you can buy investment funds from lots of different investment fund providers, both UK and abroad and you can buy some, you know, gilts and the whole range of different investments are within their platform. Absolutely. whole range of lots of different funds, critically managed by lots and lots of different fund managers, because no one fund manager can say that they've got the absolute golden bullet for how things work. Vanguard is different.

33:38Vanguard is a very good way of accessing something called an index instead. So common indexes, FTSE 100, S &P 500. You've got to ask yourself, if I pay a fund manager, and you've already alluded to the fact you don't like charges being taken off your money and why should you? You don't mind people taking money if they're going to do a better job. But if that fund manager at the end of five, seven years hasn't actually done any better than the index, well, what was the point of paying the fund manager? And this is the argument that passive investors will use. And what Vanguard do is they have a series of indexes.

34:13So it won't ever do better or worse than the index. You're simply tracking an index and it's a very low cost way of doing things. I think it's a really important thing. I'm going to just come in and make sure that people understand this. So when you have a fund manager, they're a stock picker. So they're employing someone to pick stocks. You might have a fund that is US smaller companies and some stock picker, someone is employed to go and say, I think these are going to be the US smaller companies that do really well over the next five years. I'm going to pick a hundred of them. And here's how I make my decision.

34:44And because of that, that fund has a higher charge than other funds because it's employing people to pick shares for you. An index, let's take the FTSE 250. So that is an index of the 250 biggest firms listed in the UK stock markets. That's how it's decided. I mean, there are some complexities, I'm keeping it simple. But it's simply the 250 biggest UK firms. So when you invest in an index fund, you just have a computer that is managing and mapping that you are investing in the same proportion as the index that is set up. There's no one picking funds for you. It's just giving you a widespread of that index.

35:25And it might be S &P or it might be NASDAQ or it might be something in Chinese indices. So an index doesn't have anyone picking stocks. It's just trying to mirror a performance of a certain sector or a country. And therefore, when you're investing in it, the fees are lower. Now, absolutely, as we've talked about, if you have a stock picker who's brilliant and gets it right, then it may well be worth paying the fees. But on average, you're going to struggle. So picking a passive fund, which is one where it's just based off the index, while it might not perform quite as well as some managed funds, as the fees are lower, that can really have an impact.

36:04So at least you're not paying someone lots of fees if they're going to underperform. Fair summary, Louise? I think that's really well done. 10 out of 10, Martin. I should do this for a living. You should do, shouldn't you? But Vanguard, talking about Vanguard specifically, it's their indexes. It's their indices, which are, as you've described, they do not and will not offer you, for example, a Schroeder fund or they won't offer you other fund managers. It is simply indexes. And that's their own indices that they're doing. Well, it's their managing and their algorithms are matching that indices.

36:38So all you're basically going to have your investment dragged down by is, number one, the cost of the platform, which is going to be on. That's very low. And the actual cost of getting someone to put it onto this algorithm. It's given idea. It's about 0.15, 0.2 percent at the very most compared to a normal fund. I say a normal mainstream fund, which could be as much as 0.7, 0.8. So it's a big difference there. Half percent a year. It's a lot of money. It's important to look at how the fees are structured as well, because some platforms will charge a percentage fee, whereas some platforms will charge a monetary fee.

37:14It's important to look at exactly how the charges are structured and also whether there's any minimum charges and transaction charges that apply, because on the face of it, it might look cheap, but there could be other transaction charges associated with it. So, Aaron, this is the important thing to look at. You've got two levels of charges. You've got the platform charges, i.e. the platform that you're buying on, the facility that you're using to buy and sell funds or shares. And then you've got the second one, which is the individual fund charges within it. Now, it is worth saying with the other platforms like Hargreaves, Lansdowne and AJ Bell, you can buy index trackers within them as well.

37:49And they might include even Vanguard. But whereas Vanguard, you're going to have the low platform fee because you're just buying its own index trackers. What's your thinking on this? Where does this all leave you? Have we confused you or have we made it easier? You've made it easier. Aaron, one thing I would say to you, there are a few more challenger investment platforms out there, which are pretty low cost, like your Trading 212s, your Invest Engine, Free Trade, which have different types of fees. Your AJ Bells, Hargreaves, Lansdowne, Interactive Investor and Fidelity are more established platforms with higher fees.

38:21But Vanguard, if you're just going to go for Vanguard funds, can be a lower option. The difficulty here, let me be really honest with you, Aaron. And one of the problems in doing this pod is regulations mean it is difficult to give you a recommendation because you haven't had a financial fact find. Someone has not sat down with you and found all your considerations. So getting someone to actually say which is cheapest is quite tough. My biggest advice for you, don't be put off investing because of this. Don't be put off investing because of the final mile. The differences between these funds and these platforms is not that big compared to the difference of you not investing.

38:58So just go for it. If it's right for you, go for it. Do you understand what I mean by that? Yeah, no, that makes sense. You know, it's not going to be that prohibitive. There are lots of choices. Trading 212 has no cost, no fee to buy yourself funds, no fees to buy yourself shares, can be managed online or an app. Invest Engine is similar. You may find those to be the easiest way once you know what you want to do. But buying yourself, getting yourself a nice spread of investments in index funds is a good way to start with your£100. You know, it's cross your fingers money, I hope. That's how you're approaching it.

39:27and hopefully it will work well for you in the long run. That's very useful. Thank you. Cheers, mate.

39:36Now we interrupt this podcast to say stop, collaborate and listen. Yeah. ISA, ISA baby. ISA, ISA baby. I thought it was worth just talking to you for a moment about individual savings accounts, ISAs. They are designed to encourage saving or investing. As we've already discussed, they give you a£20 ,000 allowance per tax year to either save or invest or a combination of both. Now, as we've talked about cash ices many times before on the show, as I always say, it's just a savings account you never pay tax on. That's all it is. And crucially, your interest doesn't count to the personal savings allowance, the amount that you are allowed to earn each year in interest from any form of savings tax-free.

40:22So basic 20 % rate taxpayers can earn£1 ,000 of interest tax-free. Higher 40 % rate taxpayers can earn£500 a year interest tax-free. But any interest from an ISA doesn't count towards that. It's an additional allocation. But what I don't often talk about are investment ISAs. And what is the benefit of putting your investments inside the ISA wrapper? Well, there are two. The first is there's no capital gains tax. Capital gains tax is a tax on the profits you make when you sell something for more than you bought it. So, for example, if you buy shares at£1 and you later on sell them for£5, you have made£4 profit.

41:06That£4 is subject to capital gains tax. Now, you're usually allowed a gain of£3 ,000 per person per tax year before you pay any tax. That's not on an individual transaction. That's your total amount you can gain each year. So if you make profits or you crystallise profits of£3 ,000 in a tax year, there's no tax on it. Above that, basic rate taxpayers pay 18 % tax. Higher and top rate taxpayers pay 24 % tax. So it's interesting, isn't it? The tax you pay on capital gains, on profits, is less than the tax that you pay on income. But what this means is if you invest a decent whack of money, so you're putting quite a lot of money into investments and it grows, well, you could find yourself having capital gains tax to pay.

41:55More so, even if you put a small amount of money in and you were lucky enough 10 years ago to have picked Tesla and it's gone up hugely in value and then you've sold it and you made a big gain because it's the year that you sell it that the capital gains tax accrues. Even if you bought it three years ago, you sell it all this year, the capital gains tax is in this tax year, then the protection from capital gains tax may be really useful for you. The second benefit is there's no tax on dividends. Now, dividends happen when firms that are profitable pay out income to shareholders each year in the form of a dividend.

42:28So you might get a three pence per share dividend. Now, if you hold 10 ,000 shares, that becomes a quite substantial amount of money. And within an ISA, there's no tax on dividends. Outside of an ISA, when you pay dividends from shares or funds, usually the first£500 a year is tax-free. But above that, you'll pay 8.75 % tax as a basic rate taxpayer, 33.75 % as a higher rate taxpayer, and 39.35 % as an additional rate taxpayer. So those are the benefits for putting your investment inside an ISA. And if you're hoping to put substantial amounts of money away over the years, you may want to look at putting your money in an investment ISA ahead of using a cash ISA because if you do get the substantial growth on your investments and you're easily going to use up your£3 ,000 a year capital gains tax allowance, well, the amount that you save on tax using an investment ISA could outperform even a cash ISA.

43:31But if you're not going to put anything in investments, you may as well just use your cash ISA. ISA, ISA, baby.

43:42So, Gerry has a question. How do I minimise the risk of losses while attempting to get at least investment returns equivalent to saving account rates? I am a complete novice. So, Valerie, what would you suggest to her? She obviously wants some very cautious funds but wants to beat savings account but is scared of losing any money. Where would you go? What I would say is to hold as diverse a portfolio as possible. So by holding individual company shares, you're more likely to see the value go up and down. However, if you hold a diverse portfolio across different assets and geographical locations, then you will still experience some ups and downs in your investments, but you're unlikely to see the same level of volatility.

44:26And over the longer term, we expect it to outperform cash. Now, I'm going to push you, Valerie, and I know this is different regulatory. Could you give us the type of sectors or countries that you would be looking in to get that wide spread of risk? I mean, just some names. I know you can't do individual providers, but would you be looking at a global index fund? Would you be looking at US, UK? Would you be looking to go spread? Or would you be looking smaller companies, bigger companies? What would you do? Yeah. So there's different ways to get exposure to different sectors and locations. One way of doing this is to invest in individual sector funds.

45:03But actually, one good way of doing it is investing in what's called a multi-asset fund. So a multi-asset fund will set the allocations for you, so you don't need to keep an eye and change the allocations to, for example, the US versus the UK over time. That is all done by the professional fund manager. So that's a good way to get exposure to a wide range. So Valerie, give me an idea of the type of firms that offer them. I know these aren't recommendations, but so people have got the names. the type of fund managers that would be offering those multi-asset funds. Yes, so some larger companies you've probably heard of are Vanguard that we've discussed already, BlackRock and Legal in general are quite well-known names that offer these types of funds.

45:46OK, so that would be a good place for Gerry to look. Now we're going to move into my investment-specific section, people asking more specific questions here. Karen, I think we have. Karen is a caller. Yes. What's your question, please, Karen? Hello. My husband and I have just, well, we're selling a buy-to-let property that we had. And when we've paid all the taxes and done what we need to pay our family home's mortgage off, we'll be left with about£200 ,000. And we need really to find out a way of getting an income, a monthly income from that. We don't know where to put that£200 ,000. So first of all, I mean, let's just be playing.

46:28What we're actually doing is swapping asset classes here. You have a property form of investment and you're looking to swap it, I presume, into a stocks or shares or gilts or bonds type of investment. And you're looking to get some income out there. Well, we're complete novices of what we should do with it, really. But yes, I suppose. I'm going to say, and I don't mean this in a bad way, at that type of level, I would probably be paying for individual financial advice for someone to work it through for you. But let's try and get some starter ideas from our two specialists here. Let's start with Valerie.

47:01Yeah. So the starting point when making any sort of investment is making sure you've got that cash emergency fund. And then anything above that can be invested. So what you should look at is your risk profile, the timescales for accessing that investment, whether you want that income straight away or whether it's a future income. So where are you on that one, Karen? How long can you lock this money away for without touching it? And do you need the income straight away? And what type of income are you looking for? Well, we do need the income straight away, really, because we'd be losing the income from the house that we're selling.

47:37What was the yield on the property? What income were you getting each month or each year? Well, we were getting£1 ,300 a month, but we had costs associated with the property, of course, all the upkeep of it and the insurances on it. and any repairs and just general managing of the house. So let's say you're looking for income in the sort of 3 % or 4 % a year type bracket, that type to mimic, buy, to let. So what type of things should be looking at? There are income funds, aren't there, Louise? Yes, they are. If you don't want to have risk, in other words, you want to know, you don't feel as if you're able to commit the capital for at least five to seven years and you do just want to know that it's safe and not going to go anywhere, you can look at the national savings.

48:28Now, I like national savings. They're backed by H &M Treasury. They have a one-year income bond at the moment. That's fixed. It gives you 3.98%. Or if you want to invest a little bit longer for two years, that's 3.79%. Now, the good thing is that they will put that PASIC down monthly to you. And more importantly, when it gives you the money, it goes into your bank account and it's paid gross. In other words, they haven't taken the tax off. Now, if you and your husband have got unused tax allowances, this is a really good way of getting the cash in your hands without the tax being deducted. If you do have to pay tax, obviously you can sort that out a little bit later on and pay the tax man back.

49:04We do self-assessment, yeah. OK, so there's an easy way to do that. I'm going to disagree with you, Louise, I'm afraid. Oh, go on. Why not? Go on. Because I think if you're going to put money away in a one-year bond with income, you've got – remember that every UK financial services protector is protected by the financial services compensation scheme up to£85 ,000. So if you don't put more than£85 ,000 in a place, you can get 4.58 % fixed with GB Bank and it pays income monthly. You can offer it. I have a special surprise for you, Martin. You have Stream Bank at 4.52%. Go on, carry on. I have a special trick up my sleeve.

49:37It's called a cash platform. Now, what a cash platform is, is, Karen, the worst thing about having cash and opening lots of different bank accounts for£85 ,000 is it's cumbersome, it takes time, and it's administratively cumbersome. There are special platforms that you can get where you put your money in, let's just say£200 ,000, into a platform, and what you can do is that platform provider will direct£85 ,000 into a multiple range of different bank accounts, all offering high rates of interest, up to 5%. So you've got lots of different high-rate-paying bank accounts, but only got the administrative burden of having one platform.

50:17Well, again, sorry to argue with you. Barring one product at the moment, which is in the five-year fixed category, none of Raisin, Hargreaves, Lansdowne or Flagstone, which are the platform providers, have accounts that beat the best buys on the market. So I absolutely agree that platforms can be very useful if you want to do it easily. But as we're talking £200 ,000, we're only talking two or three accounts locked away for a year, I'd probably just go with the highest rates, to be honest. Okay, I'll concede and I'll accept that point. But there's one other thing that I haven't mentioned. Let's just get back to national savings.

50:43We spoke about tying the money up, those income bonds, one, two years. If you want to just have the money accessible, they do do another income bond and it's easily accessible. It's instant and they give you 3.26. So not as much of the individual bank accounts that Martin's spoken about and also the fixed ones, but there is an instant access one that National Savings do. So it's interesting that you as an advisor have gone for a savings, not an investment platform. I mean, you're talking about locking away for one year. The rates on fixes drop as we go longer at the moment, which is a reverse of where we were about a year ago.

51:15So you wouldn't suggest doing it into some form of investment? Well, it depends if Karen and her husband want to have some sort of investment risk for part of their investments for the future. Karen, what sort of timeframe are you looking at investing and how do you feel about having part of your investments that go up and down in value or do you want it all just completely secure? Well, we could split it with 100 ,000 something safer and 100 ,000 in something that we do have some risk. yes i mean we could do that this comes back down to martin saying you really need to get some independent financial advice but if you're looking at perhaps having some in cash and some in investing you've got isa allowances that you can both use up 20 000 each you could have 40 000 in cash isas and then you can put some into the remaining amount into a cash deposit account that's worth hundred thousand pounds 85 000 but then you can then look at getting some financial advice for investing in a nice range of stocks and shares.

52:11Please, wouldn't you use your ISA allowance for the investments ahead of cash ISAs? Not necessarily. I think what I'd do is I'd sit down and look at what the potential yields would be on the type of investment that Karen chooses over the cash that she's, it depends what she's wanting. The equity ISAs, where they're good is you don't have to pay capital gains tax. And then they've both got capital gains tax allowance of£3 ,000 each. But if you're only investing£100 ,000, then you have to do a little calculation. Like I said, it's a bit too much to sort of do without actually getting some sort of more wider discussion with a financial advisor.

52:46You need to do that arithmetic to come back of a fag packet, so to say. And so let's just go for your£100 ,000 caution investment. What type of thing should people be looking at? Well,£100 ,000, then you can get ready-made portfolios, which are more cautious in nature. Those will probably invest in the more mainstream markets like UK, US and bonds, which means that they're not quite as volatile. If you want to go at the upper end of the risk spectrum, you'll find that there are more foreign markets in there and nuanced sort of industries like sort of tech, AI industries and Japan and those wider sort of foreign climes.

53:19So get a ready-made portfolio. That would be probably my sort of way of doing it. It's very complicated. It sounds it. And one of the reasons you go for this amount of money to independent financial advisor. But if we sum it up, what we're saying is put some money in a top fixed rate savings account, about£100 ,000, and make sure it's one that pays monthly income. And there's a whole range. And there are websites out there that I'm not allowed to mention that will detail what income that you're going to be able to get from each of those are. And then for the range of investment, I mean, ultimately, again, you could go and get independent financial advice where they will tell you what to go in.

53:53Otherwise, go and find yourself a nice broad index and get yourself an index fund or a combination you might want to put something in the uk something in the us something global something as a spread that has a big wide spread of investments and cross your fingers and hopefully if you're putting this away for five or ten years it will substantially outperform your savings that's a simple way to say it the problem is almost it's almost that people sit there and they're paralyzed by choice there's too much choice and i'm afraid that's one of the difficulties that they have in some ways the thing to remember is as long as it's a nice broad spread the sin of not doing anything is bigger than the sin of doing something that isn't the very best option.

54:32Does that make sense? That's what I'm worried about. Yeah, stop that. Forget that. Forget that. Don't worry about what you can't do. I guarantee whatever you put your money in, in 10 years' time with hindsight will not be the very best return. Your question is not that. Your question is, would it be better than just leaving it sitting in savings? And if you leave it sitting in 10 years, on the balance of probability, no guarantees you could lose money on the balance of probability if you pick a very wide spread of investments like indices index funds which you talked about earlier thank god you were mentioning that's one of them yeah and and it has different places you know us trackers all these different trackers on the balance of properties that will outperform savings what we don't want is analysis paralysis yes in a way just do go for it okay i suppose the important thing with when starting out with investing is there's actually three distinct areas.

55:28So there's the platform in which you invest, there's the product in which you invest in. So for example, your stocks and shares, ISA, or your pension, and then there's underlying funds. So there's those three different elements that come together to kind of create that investment for you. Perfect. We wish you the best. Thank you so much. Thank you so much. Thank you for coming on and asking your question. I hope it all goes well. Come back in 10 years' time and let us know how you did. Yes, OK. Thank you.

56:01Right, I want to do some quickfire now about investment specifics. Chris asks, what is the benefit or otherwise of EFTs or ETFs? I think he means over standard funds. Valerie? Yeah, so ETFs are passive, but as we said, there's some other passive OICs and unit trusts. An OIC, by the way, is not a smelly person who's beneath you. It's an open-ended investment trust. Is that right? No, no, open-ended investment. Company. Company. Open-ended investment company. That's what an OIC is, yeah. So ETF, so they're low cost and they're passive, so it can help you create a low-cost portfolio. But an ETF is actually a share, isn't it?

56:37Is that right? That you're sort of buying a share in a fund. Rather, unlike others which are set up as widespread of funds, an ETF is you buy one share and its price moves up and down based on the underlying investments. Is that correct? Yes, that's correct. and they're traded throughout the day, whereas Unitrust and OICs, for example, are traded daily rather than continuously throughout the day. So the benefit is that they're low cost and the price moves more rapidly? Yes, that's correct, yeah. Okay, Judith says, love to hear more about gilts and the best platform to buy them with without needing an advisor.

57:09Now, a gilts is a government bond, but government is providing security. One of the advantages is you don't pay capital gains tax. Now, funnily enough, I've been working on an article myself recently where I haven't published it yet, where if you buy short dated bonds, so you know you've only got buying them for a couple of years and you know what the interest rate is and you know what they'll perform because of the tax advantages, they can actually outperform savings accounts. So let's go to Louise. Talk us through this. Hi, yes. It's actually quite difficult for a direct investor to go and buy a gilt per se.

57:43What I would probably look at doing is there are a range of, they're called discretionary managers there's a company called Evelyn for example and they will if you give them your money they will buy a basket of gilts that are short dated i.e less than five years and they will manage that for you so they'll jump in and out as is needed but I would for gilts it's something that I personally and I'm an expert would not go and buy one myself I'd go to a guilt fund manager Evelyn is a good example of a fund manager that would give you a guilt portfolio Although if you're buying short-dated gilts, you can buy them on the platforms like Hargreaves, Lansdowne and AJFL.

58:22You can, but like I said, you're having to sort of look at the dates and the maturity values. And if you go to them, I think gilts are quite a specialist. It's not something that I personally would do myself. I have done it myself. But Martin, you are a financial guru. How did you feel about doing it and making the decisions and understanding things as terms like power and value and yields? Because I was buying short dated gilts. So I knew what the value would be at maturity. I knew what I was paying for them. I knew what the interest was. I could do a back calculation of giving myself a compound interest return and comparing it to savings on the tax.

59:00So and that's what the guide that I'm planning to publish at some point, but I haven't got there yet, will explain to people how to do. But it is something that you really need to understand before you do it yourself, as with all these things. That's exactly the point. If you've got the knowledge to be able to do that, then do it. If you haven't, there are fund managers that will do that for you. And gilt portfolios are generally a lot, lot cheaply charged than equity portfolios. The fund managers don't take a lot from it. Look, I was waiting for this question and I've had two and they say the same thing.

59:28And I know where you're coming from, Vlad and Freddie. Vlad, what's the best performing asset over the last 20 years? What is your recommendation? Save or invest in it? Freddie, what has been the best performing asset over the last 10 years? And do you think it will be the best performing asset of the next 10 years? These are Bitcoin questions by the people who wrote them. I saw it. These are questions about Bitcoin. Are either of you going to talk to us about Bitcoin as an investment? No, it's not an area of expertise for me. It's an unregulated advice area. And yeah, it's not something I would have that much knowledge on.

1:00:07Louise? I would agree on the basis that a financial advisor will look at mainstream, generally regulated investments with compensation schemes in the UK. A Bitcoin has none of those things. You buy it, you risk it, you can't sue anyone if you got it wrong. So Bitcoin is effectively technically speculation, not investment, because investment generally needs to have a form of income that you can earn from it. That isn't a value judgment, it's just a definition. So you're speculating that if you buy Bitcoin and you don't have to buy a whole Bitcoin, you can buy funds in Bitcoin and you can buy small amounts of Bitcoin, you're hoping that someone, its value will go up so that when you spend it, its value is greater than when you bought it.

1:00:48And over the past 10 to 20 years, it has gone up in extreme amounts. And there are people out there who have made large amounts of money in Bitcoin. But the whole strength of Bitcoin as an investment is its volatility, is that it moves up and down really rapidly. Now, many people have different views on Bitcoin. Some see it as a currency. Some deny that it's a currency. Some see it as a store of value, and certainly it has been the store of value, and it has gone up traditionally over the years. Some see it as a way of moving away from fiat currency, state-based currencies, into a form of, you know, consumer-led, worldwide, not looking at the way that general governments move form of currency.

1:01:27You can think of it as all those things. I don't want to get involved. You could equally think of it as, I'm going to buy it on the greater fool theory. I'm going to buy it on the idea that a greater fool than I will be willing to pay more for it than I did in a few years time. Whatever your philosophical view of Bitcoin, it has gone up very substantially. But it isn't regulated. It is outside the general form of regulation. You hear the reticence of our financial advisors to talk about it. So, two rules. One, if you're buying Bitcoin, understand that it is money you can lose and you should not be putting in any more money than you can afford to lose.

1:02:07Number two, there are a lot of Bitcoin scams out there. I am the face of many of them. They use my face to try and get you in things called Bitcoin Coda. If you're going to be buying Bitcoin, do your research. Go to a proper rated exchange. Buy an amount. Make sure it's safe. Do not click anything online that's advertising to you to buy Bitcoin. I mean, some of the big name, this is not a recommendation because I haven't researched it, but some of the big name exchange are the likes of Coinbase and Binance and BuyBite and Upbit. But be very, very careful that you know what you're doing. Don't rely on what I've just said.

1:02:44Alternatively, we talked exchange traded funds before. We have now seen Sweden's had exchange traded funds in Bitcoin and other cryptocurrencies for a long time. The US, I think, has started to deregulate and allowed exchange-traded funds, so you're actually buying it through a stock market mechanism. So financial advisors aren't going to advise you on it. It is highly speculative, highly risky. It may well make you a lot of money. It may well lose you all your money. You have to understand that before you go into it. It is certainly not something you should be putting the majority of your assets in unless you want to take an extremely large amount of risk.

1:03:17But equally, many people have done very well because its price has shot up over the years, and I need to be honest about that rather than hiding it. A final thought, be very careful of social media on Bitcoin. There have been a lot of social media influencers who are trying to target young people to put their money in there, some of which have been done on the back of it and they've been paid to do so and it isn't necessarily because it's in your interest, it's in their interest. And there are also other people out there who promote Bitcoin very strongly out of a political ideology and they want it to be done on a political, a sort of libertarian, an economic libertarian type of ideology.

1:03:51Again, if you're going to put money in Bitcoin, do your research. Understand that it should be a limited amount of your asset allocation and know the risks. And if you're unsure, don't do it.

1:04:06And I've got one final question I want to put to you. I've got about 40 I haven't done, but it's been really fascinating. Thank you both. But I thought I'd ask this one because it's wonderful to have you both to help me answer this question. Ian says, There has been a lot of discussion about the potential reduction of the cash ISA limit. Well, we know that. It's not happening for now. Doesn't mean it may not happen in the future. What is the difference between a cash ISA and a stocks and shares ISA invested in money market funds? So let me just break something out before we get to that. There are a number of platforms of stocks and shares ISAs that allow you to keep money in cash, that it is protected in the same way as a deposit account.

1:04:45They're designed for you to leave your cash sitting there holding while you decide what to invest in. But there are naturally no rules that stop you doing so. And some of the interest rates are around 4%, not as good as the top cash ISAs, but not far from it. So if the cash ISA limit were to be dropped, one loophole is that you could put your money in a stocks and shares ISA and hold it in cash. But there's a second separate thing here called a money market fund, which other people look at that is sort of quasi cash. Valerie, what is a money market fund? Yeah, so a money market fund is a fund that invests in cash equivalents, so short dated bonds and gilts.

1:05:25So it's still subject to investment risk and the value can go up and down. It's just a lower risk investment than investing a fund of equities. So on the back of that, thank you. On the back of that, you know, if you want to contrast a cash ISA, Well, if you want to mimic a cash ISA in the stocks and shares ISA, you would leave it in the holding cash pattern, and that would give you some interest, so not quite as good, or slightly higher risk because you don't get the deposit protection that you get within a cash ISA because it's a form of savings. You could put it in money market funds to try and mimic similar returns with a relative level of safety compared to putting it into cash savings.

1:06:04Hopefully that answers the question. We could have done this for at least an hour more with the number of questions we've got. I'd like to thank very much at this part, Valerie Wilson, Chartered Financial Planner at Johnson Carmichael Wealth, and Louise Claro, Managing Director of Circle Financial Services and an independent financial advisor, for all their information, debate, didactic and hopefully help to try and get you on the investment path. Thank you both so much.

1:06:32And that is it for the week. Now, when I originally planned to do this podcast, I was going to do a whole section on how to maximise your savings interest too. But we talked so long on investment, I think I'm going to save that for next week. If you've enjoyed this week's podcast, please tell your friends that you've been listening to the Martin Lewis podcast and suggest that they do it too. Why not subscribe? That way you'll never miss it. Your pockets will be pleased with you. We tend to put out a new episode every Thursday. and if you've not enjoyed it, I'm sorry, but why have you listened for this long?

1:07:23Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlimispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen.

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